Vietnam cut M2 growth target to 15-16% in 2011

Vietnam Government cut the target of money supply (M2) growth to 15-16% from 21-24% earlier in an effort to tackle accelerating inflation, the state-run online newspaper VnEconomy reported after Government’s online meeting on February 24 morning.

Credit growth target was also cut to below 20% from 23% set two months ago, the state media added.

Tightening credit and M2 growth will help to reduce total investment and consumption, said Deputy Prime Minister Nguyen Sinh Hung, noting that the move will not hamper liquidity to rural areas and the country’s important industries to preserve economic growth.

Also in the meeting, Government lowered the target of budget deficit by 0.3% to 5% of GDP, aiming to raise the state’s revenue by 7-8% (compared to 5% in early 2011) and trim down the state’s recurrent expenditures and investment.

Specifically, the Government will cut the state’s recurrent spending in the last 9 months of the year by 10% compared to the initial plan, and bring total investment to 38-39% of GDP from 41%, which is expected to tame inflation.

Trade deficit was targeted at below 16% of total export turnover compared to the initial target of 18%, helping to balance international balance of payment.

Vietnam’s consumer-price index in January rose at its fastest pace in two years in February, gaining 12.17% on year and 1.74% from the previous month, the government said Wednesday.

“Curbing inflation is now the top priority and must be consistently achieved by Government and local authorities”, the Deputy Prime Minister said – Stoxplus,com

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial